Sunday, September 21, 2008

Why don't I trust the bu$h administration on their rush to rescue our financial giants? Could it be that we were blindly hurried into the Patriot Act... or was it the fast moving attack on Iraq... hell, it's really both. And both have been huge blunders. The bu$h administration has a record of screwing the pooch on way too many items over the years... and we are supposed to just let him have Carte Blanche?More after selections of the N.Y. Times article.

WASHINGTON — The Bush administration on Saturday formally proposed a vast bailout of financial institutions in the United States, requesting unfettered authority for the Treasury Department to buy up to $700 billion in distressed mortgage-related assets from the private firms.

The proposal, not quite three pages long, was stunning for its stark simplicity. It would raise the national debt ceiling to $11.3 trillion. And it would place no restrictions on the administration other than requiring semiannual reports to Congress, granting the Treasury secretary unprecedented power to buy and resell mortgage debt.

“This is a big package, because it was a big problem,” President Bush said Saturday at a White House news conference...

Some Congressional Republicans warned Democrats not to overreach...

The administration’s plan would allow the Treasury to hire staff members and engage outside firms to help manage its purchases. And officials said that the administration envisioned enlisting several outside firms to help run the effort to buy up mortgage-related assets...

You have got to be kidding me right? "...unfettered authority...?" Like Cheney? Like Rummy? Like "Gonzo"? Like "heck of a job" Brownie? Sorry, I've been down this road before... you're incompetent bu$h and so is your staff. If Paulson was so great why has the problem gotten so huge?

bu$h telling me it's a "big problem" does not ease my fears or bode well with me... I don't trust the man. A man I call "King Midas in Reverse!" I can sense a real rip off of the American people here, name one thing he has successfully done for U.S. citizens. Or better yet, reel off all the things bu$h and his cronies have benefitted from when they expedite policy at the expense of the American public.

"Some Congressional Republicans warned Democrats not to overreach..." WTF? Who the fuck are they to tell our Democratic congressional leaders "not to overreach..." I hope they "overreach" and finally protect the electorate from bu$hco.

"...the administration envisioned enlisting several outside firms to help run the effort to buy up mortgage-related assets..." This sounds like outsourcing of jobs and special contracts to me, ala Iraq. How much will this cost? Who will be doing the work? The same schmoes who were working on Wall St. and got us into this mess?

In conclusion, I don't trust a fucking thing bu$h proposes, especially when he is trying to ramrod a plan down the American public's throat. We've been screwed too many times before.

Of course I'm no economist, but Paul Krugman is and he agrees with me: No Deal.

I hate to say this, but looking at the plan as leaked, I have to say no deal. Not unless Treasury explains, very clearly, why this is supposed to work, other than through having taxpayers pay premium prices for lousy assets...

Here’s the thing: historically, financial system rescues have involved seizing the troubled institutions and guaranteeing their debts; only after that did the government try to repackage and sell their assets. The feds took over S&Ls first, protecting their depositors, then transferred their bad assets to the RTC. The Swedes took over troubled banks, again protecting their depositors, before transferring their assets to their equivalent institutions.

The Treasury plan, by contrast, looks like an attempt to restore confidence in the financial system — that is, convince creditors of troubled institutions that everything’s OK — simply by buying assets off these institutions. This will only work if the prices Treasury pays are much higher than current market prices; that, in turn, can only be true either if this is mainly a liquidity problem — which seems doubtful — or if Treasury is going to be paying a huge premium, in effect throwing taxpayers’ money at the financial world.

And there’s no quid pro quo here — nothing that gives taxpayers a stake in the upside, nothing that ensures that the money is used to stabilize the system rather than reward the undeserving.

I hope I’m wrong about this. But let me say it again: Treasury needs to explain why this is supposed to work — not try to panic Congress into giving it a blank check. Otherwise, no deal.

It would give Paulson not only the power to buy assets, but put terms in place which would make legal investigation of those arrangements impossible, and these contracts could not be questioned in a court of law. It is the Authorization for Use of Military Force, Protect America Act, and war spending votes all rolled into one. Having seen that it cannot assume the unitary executive since the Supreme Court rejected it, they are now turning to Article III to get a trembling Congress to accept it. There is a crisis, but there is no catastrophe. Even when the physical nexus of the financial world was directly attacked, there was no need for this kind of unlimited spending power...

This is not a financial crisis in the end, as the Paulson Proposal shows, but a constitutional moment, where the very mandate of government is in play. Paulson wants the tax payer to be the fool of last resort, the group of people stupid enough to buy things that no one else on the planet is stupid enough to buy...